Restoration as an economic enterprise and driver of job creation
Long-term growth in Malaysia's life insurance
1. ALEXANDER BANOCZI
May 2018
UNC Chapel Hill
TRICIA SUN
May 2018
UC Berkeley
ALISHA JOSHI
May 2019
UPenn
ANSHUMAN PARIKH
May 2018
Emory
AMANDA SPIEZIO
May 2019
Ithaca College
JONATHAN CIOCON
May 2018
Seton Hall
3. EXECUTIVE SUMMARY
Expanding life insurance in Malaysia provides the best long-term opportunity for Prudential
Positive economic
environment
Suitable
demographic
characteristics
Fitting business
landscape
LONG-TERM
INVESTMENT
OPPORTUNITY:
LIFE INSURANCE
IN MALAYSIA
LIFE INSURANCE IN MALAYSIA IMPLEMENTATION
Target the younger
generation
Advertising strategies
Follow the Takaful
Operational Framework
INTRODUCTION RECOMMENDATION FINANCIALS CONCLUSION
FINANCIAL IMPACT
$93.17mil in annual revenue by
2025
5. ECONOMIC ENVIRONMENT
Malaysia has a stably growing economy which is ready for Prudential.
2013 2014 2015(f) 2016(f)
GDP growth 4.7 6 5 4.5
Inflation 2.1 3.1 2.4 3.8
Budget balance -4.3 -3.6 -3.5 -3.2
Current account balance 3.5 4.3 2.8 3.3
Public debt 55.9 55.2 55.6 53.6
GDP Growth
Normal level of inflation
Public debt controllable
INTRODUCTION RECOMMENDATION FINANCIALS CONCLUSION
6. ECONOMIC ENVIRONMENT
Regulation and the future of the economic status of the population
“countries with higher levels of financial
development experience faster reductions
in income inequality…and poverty
levels…”
- Microfinance and Poverty
Reduction, IFC
NEW ECONOMIC MODEL MICROFINANCE IN MALAYSIA
• Inclusive growth targeting
lower classes
• Controversial
• Effects
INTRODUCTION RECOMMENDATION FINANCIALS CONCLUSION
7. DEMOGRAPHIC FACTORS
Malaysia’s demographic environment is well-suited for an investment opportunity for Prudential
YOUNG POPULATION
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
0-14 15-24 25-54 55-64 65 +
MALAYSIAN AGE STRUCTURE
Median age: 27.9 years
A young population will allow for
long-term growth in Malaysia
HIGH LEVEL OF EDUCATION
94.6%
Literacy rate
13 years
School life expectancy
GROWING WEALTH
42%
Projected growth of
population of high
net worth individuals
in the next 10 years
$26,600
GDP per
capita
2.7%
Unemployment
rate
INTRODUCTION RECOMMENDATION FINANCIALS CONCLUSION
8. BUSINESS LANDSCAPE
COMPETITORS
AIA BERHAD GREAT EASTERN
LIFE ASSURANCE
PRUDENTIAL ASSURANCE
MALAYSIA BERHAD
INTRODUCTION RECOMMENDATION FINANCIALS CONCLUSION
9. BUSINESS LANDSCAPE
The Malaysian life insurance business can be modeled after successful Japanese operations
INTRODUCTION RECOMMENDATION FINANCIALS CONCLUSION
11. IMPLEMENTATION
Prudential should target the 25-54yo age group through a series of advertising components
25-54 age group
(41.12% of the population)
• Exposed to microfinance
• Open to using financial
products
60%
40%
Online
sales
In person
sales
TARGET AUDIENCE ADVERTISING COMPONENTS
Mobile
Application with a
Health Tracker
Social Media
Advertising
Celebrity
Endorsements
Television
Commercial
$30,000
Development fee
$45,000
Manager salary
Varies
$6,000
TARGET SALES STRUCTURE
INTRODUCTION RECOMMENDATION FINANCIALS CONCLUSION
12. TAKAFUL OPERATIONAL FRAMEWORK
Prudential needs to follow the Takaful Operational Framework when expanding its life insurance policy
TAKAFUL: the Islamic form of health insurance
1
• Ensure uniformity with Shariah principles and consistency with the essential
features of takaful
2
• Promote prudent management of the takaful funds to enhance the funds’
financial resilience
3
• Promote fairness and transparency to protect the interests of participants
4
• Ensure appropriateness of fees and charges imposed on the participants
and takaful funds
5
• Instill good governance and risk management practices
GUIDING PRINCIPLES:
INTRODUCTION RECOMMENDATION FINANCIALS CONCLUSION
13. FINANCIAL IMPACT
Life insurance in Malaysia would provide long-term returns for Prudential
STATUS QUO:
APE(RM MILLION) 2014 2015 GROWTH
Individual + Group 4.710 4.914 4.3%
ASSUMPTIONS:
1. Continued Single Digit Growth (4.3%)
according to Life Insurance Association of
Malaysia
2. 70% market penetration for life insurance in
Malaysia by 2020 (Malaysian Insurance
Institute)
3. Gibraltar will take at least 4% of the market
share (using Japan as a comparable).
75.48
78.73
82.11
85.64
89.32
93.17
60.00
65.00
70.00
75.00
80.00
85.00
90.00
95.00
2020 2021 2022 2023 2024 2025
ForecastedRevenue($Millions)
Year
STATUS QUO
ASSUMPTIONS
REVENUE FORECASTS
INTRODUCTION RECOMMENDATION FINANCIALS CONCLUSION
